Legalize / United Kingdom / Public General Act

Finance Act 2011

Type Public General Act

Publication 2011-07-19

State In force

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

Part 1 — Charges, rates, allowances etc

Income tax

Charge and main rates for 2011-12

1

(1) Income tax is charged for the tax year 2011-12.

(2) For that tax year—

(a) the basic rate is 20%,

(b) the higher rate is 40%, and

Rates of alcoholic liquor duties

2

(1) For the tax year 2011-12 the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with “ £35,000 ”.

(2) Accordingly section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply for that tax year.

Personal allowance for 2011-12 for those aged under 65

3

(1) For the tax year 2011-12 the amount specified in section 35(1) of ITA 2007 (personal allowance for those aged under 65) is replaced with “ £ 7,475 ”.

(2) Accordingly section 57 of that Act (indexation of allowances), so far as relating to the amount specified in section 35(1) of that Act, does not apply for that tax year.

Corporation tax

Main rate for financial year 2011

4

(1) In section 2(2)(a) of FA 2010 (main corporation tax rate for financial year 2011 on profits other than ring fence profits), for “27%” substitute “ 26% ”.

(2) The amendment made by this section is treated as having come into force on 1 April 2011.

Charge and main rate for financial year 2012

5

(1) Corporation tax is charged for the financial year 2012.

(2) For that year the rate of corporation tax is—

(a) 24% on profits of companies other than ring fence profits, and

(b) 30% on ring fence profits of companies.

(3) In subsection (2) “ring fence profits” has the same meaning as in Part 8 of CTA 2010 (see section 276 of that Act).

Small profits rate and fractions for financial year 2011

6

(1) For the financial year 2011 the small profits rate is—

(a) 20% on profits of companies other than ring fence profits, and

(b) 19% on ring fence profits of companies.

(2) For the purposes of Part 3 of CTA 2010, for that year—

(a) the standard fraction is 3/200ths, and

(b) the ring fence fraction is 11/400ths.

(3) In subsection (1) “ring fence profits” has the same meaning as in Part 8 of that Act (see section 276 of that Act).

Increase in rate of supplementary charge

7

(1) In section 330 of CTA 2010 (supplementary charge in respect of ring fence trades), in subsection (1), for “20%” substitute “ 32% ”.

(2) The amendment made by subsection (1) has effect in relation to accounting periods beginning on or after 24 March 2011 (but see also subsection (3)).

(3) Subsections (4) to (10) apply where a company has an accounting period beginning before 24 March 2011 and ending on or after that date (“the straddling period”).

(4) For the purpose of calculating the amount of the supplementary charge on the company for the straddling period—

(a) so much of that period as falls before 24 March 2011, and so much of that period as falls on or after that date, are treated as separate accounting periods, and

(b) the company's adjusted ring fence profits for the straddling period are apportioned to the two separate accounting periods in proportion to the number of days in those periods.

(5) But if the basis of apportionment in subsection (4)(b) would work unjustly or unreasonably in the company's case, the company may elect for its profits to be apportioned on another basis that is just and reasonable and specified in the election.

(6) The amount of the supplementary charge on the company for the straddling period is the sum of the amounts of supplementary charge that would, in accordance with subsections (4) and (5), be chargeable on the company for those separate accounting periods.

See also sections 330A and 330B of CTA 2010 (which have effect in relation to the separate accounting period consisting of so much of the straddling period as falls on or after 24 March 2011).

(7) In relation to the straddling period—

(a) the Instalment Payments Regulations apply as if the amendment made by subsection (1) had not been made, but

(b) those Regulations also apply separately, in accordance with subsection (8), in relation to the increase in the amount of any supplementary charge on the company for that period that arises as a result of that amendment.

(8) In the separate application of those Regulations under subsection (7)(b), those Regulations have effect as if, for the purposes of those Regulations—

(a) the straddling period were an accounting period beginning on 24 March 2011,

(b) supplementary charge were chargeable on the company for that period, and

(c) the amount of that charge were equal to the increase in the amount of the supplementary charge for the straddling period that arises as a result of the amendment made by subsection (1).

(9) Any reference in the Instalment Payment Regulations to the total liability of a company is, accordingly, to be read—

(a) in their application as a result of subsection (7)(a), as a reference to the amount that would be the company's total liability for the straddling period if the amendment made by subsection (1) had not been made, and

(b) in their application as a result of subsection (7)(b), as a reference to the amount of the supplementary charge on the company for the deemed accounting period under subsection (8)(a).

(10) For the purposes of the Instalment Payment Regulations—

(a) a company is to be regarded as a large company as respects the deemed accounting period under subsection (8)(a) if (and only if) it is a large company for those purposes as respects the straddling period, and

(b) any question whether a company is a large company as respects the straddling period is to be determined as it would have been determined if the amendment made by subsection (1) had not been made.

(11) In this section—

“adjusted ring fence profits” has the same meaning as in section 330 of CTA 2010;

“the Instalment Payments Regulations” means the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175);

“supplementary charge” means any sum chargeable under section 330(1) of CTA 2010 as if it were an amount of corporation tax.

Capital gains tax

Annual exempt amount

8

(1) Section 3 of TCGA 1992 (annual exempt amount) is amended as follows.

(2) For subsection (2) substitute—

(2) The exempt amount for a tax year is £10,600.

(3) For subsections (3) and (4) substitute—

(3) If there is a relevant increase in RPI in relation to a tax year— (a) the exempt amount is to be increased in accordance with Steps 1 and 2, and (b) subsection (2) has effect from then on (for that and subsequent tax years) as if it referred to the increased amount, unless Parliament otherwise determines. (3A) There is a relevant increase in RPI in relation to a tax year if the retail prices index for the September before the start of the tax year is higher than it was for the previous September. (3B) Steps 1 and 2 are— - Step 1 Increase the exempt amount for the previous tax year by the same percentage as the percentage of the relevant increase in RPI. - Step 2 If the result of Step 1 is not a multiple of £100, round it up to the nearest multiple of £100. (4) If there is a relevant increase in RPI in relation to a tax year, the Treasury must before the start of that tax year make an order showing the amount arrived at as a result of Steps 1 and 2.

(4) The amendment made by subsection (2) has effect for the tax year 2011-12 and subsequent tax years.

(5) For the tax year 2011-12, section 3(3) of TCGA 1992 (indexation) does not apply.

(6) The amendment made by subsection (3) has effect for the tax year 2012-13 and subsequent tax years.

Entrepreneurs’ relief

9

(1) In section 169N of TCGA 1992 (amount of relief: general)—

(a) in subsection (4) for “£5 million” substitute “ £10 million ”, and

(b) in subsection (4A) for “£5 million” substitute “ £10 million ”.

(2) The amendments made by this section have effect in relation to qualifying business disposals occurring on or after 6 April 2011.

Capital allowances

Plant and machinery writing-down allowances

10

(1) Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.

(2) In section 56 (amount of allowances and charges), in subsection (1) for “20%” substitute “ 18% ”.

(3) In section 104D (writing-down allowances: special rate expenditure)—

(a) in subsection (1) for “10%” substitute “ 8% ”, and

(b) after that subsection insert—

(1A) But, in relation to special rate expenditure incurred wholly for the purposes of a ring fence trade in respect of which tax is chargeable under section 330(1) of CTA 2010 (supplementary charge in respect of ring fence trades), the amount of the writing-down allowance to which a person is entitled for a chargeable period is 10% of the amount by which AQE exceeds TDR.

(4) Accordingly—

(a) in the heading for section 104D, after “at” insert “ 8% or ”, and

(b) in sections 56(2)(a) and 104E(1)(a), before “10%” insert “ 8% or ”.

(5) Part 10 of Schedule 22 to FA 2000 (companies within tonnage tax: capital allowances in respect of ship leasing), as it has effect (by virtue of section 57(9) of this Act) in relation to expenditure incurred before 1 January 2011, is amended as follows.

(6) In each of the following provisions, for “20%” (in each place) substitute “ 18% ”

(a) paragraph 94(3)(a) and (4),

(b) paragraph 95(4),

(d) paragraph 98(8), and

(e) paragraph 99(2) and (5).

(7) In each of the following provisions, for “10%” substitute “ 8% ”

(a) paragraph 94(3)(b) and (4),

(b) paragraph 95(4),

(d) paragraph 98(8), and

(e) paragraph 99(2).

(8) The amendments made by this section have effect in relation to—

(a) chargeable periods beginning on or after the relevant day, and

(b) chargeable periods beginning before, and ending on or after, the relevant day.

(9) But in respect of a chargeable period within subsection (8)(b), they have effect as if—

(a) in section 56(1) of CAA 2001 and the provisions of Schedule 22 to FA 2000 mentioned in subsection (6), references to 18% were references to X%, and

(b) in section 104D(1) of CAA 2001 and the provisions of Schedule 22 to FA 2000 mentioned in subsection (7), references to 8% were references to Y%.

(10) For the purposes of subsection (9)—

$X = ( 20 BRD CP ) + ( 18 ARD CP )$

$Y = ( 10 BRD CP ) + ( 8 ARD CP )$

(11) Where X or Y would be a figure with more than 2 decimal places, it is to be rounded up to the nearest second decimal place.

(12) In subsection (10)—

BRD is the number of days in the chargeable period before the relevant day,

ARD is the number of days in the chargeable period on and after the relevant day, and

CP is the number of days in the chargeable period.

(13) The relevant day is—

(a) for corporation tax purposes, 1 April 2012, and

(b) for income tax purposes, 6 April 2012.

Annual investment allowance

11

(1) Section 51A of CAA 2001 (entitlement to annual investment allowance) is amended as follows.

(2) In subsection (5) (maximum allowance), for “£100,000” substitute “ £25,000 ”.

(3) In subsection (8) (power to amend maximum allowance), for “other” substitute “ greater ”.

(4) The amendment made by subsection (2) has effect in relation to expenditure incurred on or after the relevant day.

(5) Subsections (6) and (7) apply in relation to a chargeable period (“the actual chargeable period”) which—

(a) begins before the relevant day, and

(b) ends on or after that day.

(6) The maximum allowance under section 51A of CAA 2001 for the actual chargeable period is the sum of each maximum allowance that would be found if—

(a) the period beginning with the first day of the chargeable period and ending with the day before the relevant day, and

(b) the period beginning with the relevant day and ending with the last day of the chargeable period,

were treated as separate chargeable periods.

(7) But, so far as concerns expenditure incurred on or after the relevant day, the maximum allowance under section 51A of CAA 2001 for the actual chargeable period is the maximum allowance, calculated in accordance with subsection (6), for the period mentioned in paragraph (b) of that subsection.

(8) Subsections (6) and (7) are also to apply for the purpose of determining the maximum allowance under section 51K of CAA 2001 (operation of annual investment allowance where restrictions apply) in a case where one or more chargeable periods in which the relevant AIA qualifying expenditure is incurred are chargeable periods within subsection (5), but the modifications in subsections (9) to (11) are to apply.

(9) There is to be taken into account for the purpose mentioned in subsection (8) only chargeable periods of one year or less (whether or not they are chargeable periods within subsection (5)), and if there is more than one such period, only that period which gives rise to the greatest maximum allowance.

(10) For the purposes of subsection (9) any chargeable period—

(a) which is longer than a year, and

(b) which ends in the tax year 2012-13,

is to be treated as being a chargeable period of one year ending at the same time as it actually ends.

(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(12) Nothing in subsections (8) to (11) affects the operation of sections 51M and 51N of that Act.

(13) In this section “the relevant day” means—

(a) for corporation tax purposes, 1 April 2012, and

(b) for income tax purposes, 6 April 2012.

Short-life assets

12

(1) Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.

(2) In section 86 (short-life asset pool)—

(a) in subsection (2), for “four-year” (in each place) substitute “ relevant ”,

(b) for subsection (3) substitute—

(3) In this Chapter “the relevant cut-off” means— (a) if any of the qualifying expenditure incurred on the provision of the short-life asset was incurred before the designated day, the fourth anniversary of the end of the relevant chargeable period, and (b) in any other case, the eighth anniversary of the end of the relevant chargeable period. (3A) In subsection (3)— - “the designated day” means— 1. for corporation tax purposes, 1 April 2011, and 2. for income tax purposes, 6 April 2011; - “the relevant chargeable period” means— 1. the chargeable period in which the qualifying expenditure was incurred on the provision of the short-life asset, or 2. if the qualifying expenditure was incurred in different chargeable periods, the first chargeable period in which any of the qualifying expenditure was incurred.

, and

(3) In section 65 (the final chargeable period), in subsection (3), for “four-year” substitute “ relevant ”.

(4) In section 87 (short-life assets provided for leasing), in subsection (1)—

(a) in paragraph (b), for “four-year” substitute “ relevant ”, and

(b) in paragraph (c), for “4 years” substitute “ 8 years ”.

(5) In section 89 (disposal to connected person), in subsections (1) and (5), for “four-year” (in each place) substitute “ relevant ”.

(6) In Schedule 1 (defined expressions)—

(a) at the appropriate place insert—

relevant cut-off (in Chapter 9 of Part 2)	section 86(3)

, and

(b) omit the entry for “four-year cut-off (in Chapter 9 of Part 2)”.

Alcohol duties

Rates of alcoholic liquor duties

13

(1) ALDA 1979 is amended as follows.

(2) In section 5 (rate of duty on spirits), for “£23.80” substitute “ £25.52 ”.

(3) In section 36(1AA)(a) (standard rate of duty on beer), for “£17.32” substitute “ £18.57 ”.

(4) In section 62(1A) (rates of duty on cider)—

(a) in paragraph (a) (rate of duty per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent), for “£217.83” substitute “ £233.55 ”,

(b) in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent which is not sparkling cider), for “£50.22” substitute “ £53.84 ”, and

(5) For the table in Schedule 1 substitute—

TABLE OF RATES OF DUTY ON WINE AND MADE-WIN

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